Search This Blog

Saturday, 31 December 2016

I look on Twitter at a picture of a small duckling,
with the word ‘LAME’ written through it; a quite hard to ignore insult of the leaving
President of the United States, Barrack Obama.

Next to the picture, there is a 137 character rant
against the latest measure that this ‘lame duck POTUS’ took: to expel 35
Russian officials from the United States, in order to punish them for their
role in the alleged Russian interference in the American elections.

The challenged tweet of the Russian Embassy in the UKClick to enlarge

This tweet was not published by a Republican
splintergroup from say... Texas or Mississippi, that attacks Obama on a daily
basis just for the sake of it. No, it was printed by the official and approved (!)
Twitter account of the Russian Embassy in the United Kingdom: an account that is part of the direct responsibility of the Russian ambassador in the United Kingdom.

I don’t know if this is a new kind of ‘diplomacy’, but
I do know that it is an aggressive kind...

And suddenly I see an image for my eyes of Marlon
Brando in his unforgettable role of Don
Vito Corleone in The Godfather, while talking to his
smartest and most talented son Michael with his distinctive, whispering voice:

“Listen,
Michele. There is no ‘rispetto’ anymore between enemies these days.

In
the past, we had our quarrels and it was nasty sometimes. But there was always
respect for the power and strength of our enemies. We knew that if we hit them,
they would hit us back hard. That notion kept the balance intact.

But
look at the situation now, Michael. We don’t respect our enemies anymore and our
enemies don’t respect us. They make fun of us, nowadays! And you know, when
there is no respect, this might lead to chaos and accidents, as people don’t appreciate
each other’s power anymore!”

Of course, this “dialogue” is not really from the
Godfather, but rather a (partial) figment of my imagination. But Don Vito could
have said it about the current situation between Russia and the United States!
A situation that is even more dangerous than the real Cold War, as the
archenemies at least respected each other’s power and strength in those days.

Leaders like Reagan and Gorbachev, Carter and Brezhnev
or Kennedy and Krushev knew that they could not make one step too far, or
things would get totally out of hand really soon.

Today’s situation is totally different, however...

The Barrack Obama administration and almost the whole
American congress, as well as the NATO leadership and some powerful figures
within the European Union, have been patronizing and ridiculizing the Russian
government of President Vladimir Putin on a daily basis during the last 15
years, with an arrogance and ignorance that was very dangerous.

As if they reckoned that the Russian government was so
weak and corrupted, that it could be simply overpowered with a brisk portion of
American bluff, bravado and ‘faits accompli’.

Remember the designated rocket shield
against “Iran” in Poland and Czechia? Remember the careless flirtations of the
NATO (and the US) with Georgia and the Ukraine, in spite of old agreements
between Russia and the NATO countries that such would not happen?

Remember the revolution in Ukraine, much akin to a coup
d’etat?

In those years the United States acted like a man
attacking a grizzly bear barehanded, because he reckons that the grizzly is not
intelligent enough to really harm him... Well, it still is a grizzly, who could
kill a person with one stroke of his paw, so give it the respect and the
caution that a grizzly deserves.

And it seems that President Barrack Obama is finding the
truth of that popular wisdom out the hard way, as he is getting the same
medicine from Russia... in an even bigger dose.

Whether people like it or not, it seemed that Vladimir
Putin turned the situation in Syria totally upside down, when he came with his
army to the rescue for his ‘friend’ Bashar al-Assad. And now there is suddenly
an end looming for the nearly six year old civil war in Syria, while the
Russian interests overthere are more certain than ever before. In the meantime
the American army is entangled in a web with various rebel groups, who all
prove to be more or less akin to either Al Qaida or ISIS. The Americans could now
almost be accused of keeping this civil war alive, instead of stopping it.

At the same time the relations between Russia and
strategic NATO member(!) Turkey have been improving rapidly, after their
dramatic low in 2015 when the Turkish government downed a Russian jet fighter.
The governments of Russia and Turkey understand that they are two birds of a
feather, which have more in common in their particular situation, than that Turkey
has in common with the Western world – in spite of its prominent importance for
the NATO alliance.

On top of that, if the American accusations about the
alleged Russian cyber attacks against powerplants and other strategic American
assets are true indeed, as a
slightly hyperbolic Senator John McCain stated, it could prove that Vladimir
Putin and his henchmen have also in this situation the better deck of cards
(even though I of course don’t approve such attacks by the Russians).

Where the Americans traditionally boasted about them
having the upper hand in every terrain of warfare – on the real battlefield,
but also online – the Russians might
have proved that they could achieve the same or better results with a fraction
of the American budget.

And now – in 2016 – Vladimir Putin has shown to the
world that he could shamelessly interfere with the American presidential
elections, knowing that the democratic candidate Hillary Clinton was already a
sitting duck, with little popularity and – even worse – almost no credibility(!)
among the American population.

The winning candidate of the American elections Donald
Trump, even though he was despised in the rest of the western world, has shown
already that he is more a friend of Russia and on top of that a personal
admirer of Vladimir Putin, who he considers to be very strong, decisive and
intelligent. This also adds to the strength and self-confidence of Vladimir
Putin at this moment.

In fact Trump is even more a supporter of Vladimir
Putin than he supports the current president Barrack Obama; while that might be
treason to the eyes of many Americans, it is a fact of life that works enormously
on the lame duck image that Barrack Obama now possesses.

Suffice it to say, however, that this situation of
mutual disrespect between Russia and the United States and its respective
leadership is very dangerous.

Senator John McCain might be exaggerating with his
statement that the Russian cyberattacks are an act of war. And the hardly disguised
threats of Vladimir Putin of the past years towards the Eastern European EU member
states (Eastern Europe and the Baltic countries), as well as his aggressive interference
with respect to Ukraine, could be seen as a sign of relative weakness and lack
of self-confidence.

But still think about Don Vittorio Corleone: “Without rispetto, things could start to go
wrong, Michele. Think about that my son!”.

The stupidest mistake that both Russia and the United
States could make in 2017 is underestimating the power and determinedness of
their respective opponent. And Europe should be closely watching both parties,
as Europe could be the ultimate battlefield for a quarrel that is the result of
a lack of respect and cautiousness.

With this decision, I paid a high price for not being the right man at the right moment and for not working with the right people.

It was that
I found a job as quality assurance engineer at a genuinely wonderful company – the
headoffice for a Dutch, cooperative chain of supermarkets – in which I refound
my self-confidence and working happiness, otherwise 2016 would have been an utterly
lost and quite sad year on a personal level. A year, of which I only was glad that my family and loved
ones survived it eventually.

On top of
that some of the biggest talents in the music and film industry died in 2016;
artists and characters like David Bowie, Prince, Glenn Frey, George Michael,
Rick Parfitt, Carrie Fisher and the ueber-cool Motörhead bass-player Lemmy
Kilmister. Real heroes with whom I grew up and to whose music and performances I
watched and listened litterally all my life. And those are only the ones that I
can recall right now.

Politics was
also a mess in 2016, in The Netherlands and abroad:

The Dutch voted in favour of a useless
anti-Ukraine referendum, that in the end did not change anything in the
relation between the European Union and Ukraine, but reconfirmed the Dutch
reputation as a basically very happy nation, with nevertheless a quite narrow-minded
view on the world, in the eyes of many other European citizens;

On top of
that the Dutch put a series of politically destructive butterfingers and kamikaze pilots on 'the pedestal' of temporary political success, while leaving the more moderate politicians in a clueless shock-and-awe, basically caused by their own insignificance and ignorance;

The inhabitants
of the Phillippines voted for an self-acclaimed mass-murderer – not only in words
but allegedly also in acts – and blatant advocate of ‘executions without a
trial’, in case of alleged drugs addicts and criminals, based upon the promise of 'him cleaning out the closet' in that Asian country;

A weighted
majority of the American people – as a matter of fact a minority according to
the system of ‘one man, one vote’ – voted in favour of someone, who
scares the shit out of the rest of the American people. A man, feared
for his aggressive, gung ho political approach, his political and executive incompetence
and lack of experience, as well as his personality akin to a loose cannon,
shooting at everything that moves;

Everywhere
in Europe and far, far abroad, the population seemed firmly in the grasp of
populist politicians from either the far right or the far left side. Not only
in Eastern European countries, like Hungary (PM Viktor Órban) and Poland (shadow-president
Jaroslaw Kaczynski), but also in the United Kingdom (UKIP-leader Nigel Farage),
France (Front National leader Marine le Pen), Germany (Nationaldemokratische Partei
Deutschlands and Alternative für Deutschland) and The Netherlands (Party for
Freedom leader Geert Wilders).

And president
Recep Tayyip Erdoğan of Turkey?! He is more and more turning into a paranoid Sun
King, who considers everybody that thinks differently inside and outside Turkey as
his personal enemy, after a coup d’etat against him failed this year. And the European Union is glued to him and his policy, through the unscrupulous refugee-deal, that keeps the refugees out of our European sight, at an unknown, but probably high price.

Only ‘the formerly usual
suspect of brewing right extremism’ Austria decided in the end, that they did not want
to have an extreme right-wing country leader, in the form of FPÖ’s Norbert Hofer. A gesture, for
which I praise and thank the Austrian population.

Europe and
especially the European Union turned in the political “ugly ducklings” of the
European citizens: appreciated by almost no-one and hated by nearly everyone. Not
in the least as a consequence of the politically clumsy utterings (f.i. Jean-Claude
Juncker) and the very rigid – almost autistic – neo-liberal policies (f.i.
Eurogroup leader Jeroen Dijsselbloem and his 3% budget deficit ‘until death do us part’)
of its leaders and officials in the European Commission, the various European
(ministerial) councils and the European Central Bank.

Especially chairman
Mario Draghi of the European Central Bank, with his increased deployment of
Quantitative Easing, seemed an avid fan of the policy: “if a medicine did not work the first time, just increase the dose. And
when it still does not work, than simply double the last dose”. The
effects of this enhanced medicine will probably be the same as before,
namely... ‘nothing’!

And the European
politicians? They were so happy that somebody did something about the stalling economy, that they simply rested
on their laurels and just looked at the effects of SuperMario’s policy: “Either we did it all right or he did it all wrong, so we cannot be blamed for it after all”. And so every correlation between
political policy and the cautiously reappearing economic growth all over Europe
in 2016 seemed sheer coincidence and not the effect of sound political
decision-making.

“The people hate us, but hell did we make
them do it!” could be the European leaders’ mantra over the past eight
crisis years, in which the European leaders totally lost touch with the
European population. And this in combination with the same European leaders’ blatant
failure to address the continuing refugee crisis as a whole and undivided Union,
while instead trying “to kick the ball on other people’s turf” as soon as they
could (in this case in particular Turkey, Greece and Italy).

That was national
and international politics within the European Union in a nutshell in 2016: the
same ol’ same ol’ as before, but only worse in its execution. This utterly failed policy made it darn
hard to not give up on the European Unino and actually many people did.

At the same
time, the Cold War in 2016 seemed back at the highest level since it officially
ended. The Russians are nowadays accused of everything bad happening in the world and far, far abroad, including being solely responsible for the election of Donald Trump, as well as for the latest software-bug in the Apple
iPhone operating system and for causing a big supernova at 15,000
lightyears distance in the Andromeda Nebula. Just saying...

Of course,
Russia lies, cheats and rigs a terrible lot and probably many of the accusations made these days are true. They have a former secret agent
as president, who has “propaganda” and “deceit” as his middle names and who doesn't scare away from rigging the political cards in his favour. Go figure!

And on top of that President Vladimir Putin of Russia is more than happy to
comply in almost every accusation made to him and scream ‘Up yours” at the rest
of the world. He knows that this enhances his popularity and strength in
Russia, in spite of his poor political and economic achievements at home.

But when one
looks at the – IMHO – sometimes ridiculous accusations that are made against
Russia by the US government?! And then remembers how the world was cheated into
the ultimately disastrous Second Iraqi war – the “mother of all wars” that
spurred the emergence of IS(IS) and caused chaos and havoc in Iraq and eventually
the whole Middle East – by Colin Powell and his henchmen?! Such a person knows
he really can’t trust any government official for always telling the truth. And
the American president and his ministers the least!

As a
consequence of all this, the world cries “blue murder” about the (indeed
terrible) war in Syria and the undoubted war-crimes of the Russians and the
Syrian army. And this is very justified indeed!

Nevertheless, the
same people in the Western Society conveniently forget to do the same about the
bloody war of “our Saudi-Arabian friends” in Yemen or the liberation of Mosul
going awry for many, many Iraqis in distress.

No, to the contrary, the Saudis
can order every new batch of weapons and ammunition in the UK and the United States
(and perhaps The Netherlands too), while they get ‘service with a smile’ from
their Western allies.

In 2016 the
expressions ‘truth and credibility’ became increasingly under fire, like almost never before!

So many
lies and propaganda from all sides of the political spectrum and between
countries have been spread, that it is nearly impossible to distinguish who
tells the truth and who doesn’t anymore. Media turn more and more in service-hatches for the powers that be and for the communio opinis, as their editorial staff has been slashed by cutback upon cutback, making it nearly impossible for them to find things out themselves. Repeating the official and most-heard opinions is therefore more convenient and safe.

A tell-tale is that “fake news” became
the buzzword of 2016 and that Facebook – as the world's largest media-outlet – initially declared itself ‘innocent’ for
all the b*llshit that it spread through its 'billion visitor' website, but
nevertheless is working on a solution to prevent from spreading fake news in
the future.

And then there was religion-based terrorism, that spread from the Middle East to Europe, via low-tech, but highly successful attacks in France, Belgium and Germany: fighting for causes that few people know and even fewer people understand, but that many people fear.

Concisely
summarized, the world seemed a mess in 2016 and my “Howard Jones-ian”
conviction that things should get better in 2017, is only based upon the hope
that things can hardly get worse after 2016, unless some idiot causes a global
war or a global (climate / food / water / fuel) crisis that crashes the world
in misery.

Therefore I hope that you carry the same glimmer of hope that I do and that you are ready to do
your utmost for a better future yourself.

My more
specified thoughts for the next year will be published in my outlook on 2017,
that will appear soon on this website!

The
year 2016 should become the first real post-crisis year in The Netherlands: the
economy showed steady growth for a number of quarters in a row and the consumer
confidence in October 2016 was at the highest rate in many, many years. And to
emphasize the positive Dutch growth: the economy grew even stronger than
anticipated by the Dutch Central Planning Bureau: north of
two percentfor 2016 and as
well for 2017 (planned growth).

This
is exactly the year in which one would expect that people would feel freed to spend more money on gifts in the holiday season than the year before.

And THE national celebration and spending holiday in The Netherlands is Sinterklaas (i.e.the Dutch
version of Santa Claus / Father Christmas, but celebrated on December 5th).
This holiday is already hundreds of years old and it is the traditional day
when families give eachother presents; much more than Christmas in The
Netherlands has ever been.

In
the eve of this holiday one would expect that retail sales would go through
the roof and that the number of electronic transactions would reach record
heights with the favourable growth of the economy, except for the fact…that it
did not seem to happen.

One
of the traditions of Sinterklaas in recent years has been that the number of performed electronic transactions was measured. Every year there had been such news, full of
boasting, that yet another record had been crushed by the electronic
transaction numbers.

During the last days before
Sinterklaas there has been a substantial decrease in electronic transactions
year-on-year. The electronic Sinterklaas sales missed last years targets by a
mile on 4 and 5 December. According to the Betaalvereniging Nederland (the
Dutch Payment Association) this was caused by the fact that these days were on
Sunday and Monday this year.

On Sunday 4 December the organization
counted rougly 5.6 million performed electronic transactions. That is 56% less than last
year, when 4 December was on a Friday. And on ‘pakjesavond ‘(i.e. the night of
the presents), roughly 6.8 million payments had been made until 17.00 hour; a
decrease of 41%.

Of
course it is quite important on which day of the week the Sinterklaas night is
celebrated and I do believe that it has some influence on the sales numbers.
But respectivelya 56% and 41% decrease in retail sales on the last few days of the Sinterklaas period, in comparison to last year, seems too
much to just be blamed upon the day of the week.

And
even though the same AD article stated that there had been a massive increase
in the number of online Sinterklaas sales transactions, it is hard to believe
that that fully compensated the decreasing numbers of brick-and-mortar sales,
as B&M sales numbers are normally still much, much higher than online
sales.

So
it seemed that the Sinterklaas sales in 2016 were actually quite disappointing
in comparison with last year. And although the retail data confirming this
phenomenon will only be published by the Duth Central Bureau of Statistics in February 2017, this conclusion was anticipated by the magazine Retailnews, which
printed an
article about this peculiar phenomenon, earlier in November of this year:

Retailers will book roughly 2% lower Sinterklaas sales this year in comparison with 2015. Per capita less presents
will be bought, was disclosed by research of [research bureau] Q&A among
1500 consumers.

The number of people that celebrates
the Sinterklaas holiday remained equal and the number of people who buys
presents even increased. Nevertheless, due to lower spending per capita the
total sales will decrease this year. Even though consumer confidence was in October at the highest
level in nine years, the consumers remain cautious with extra spendings,
according to Q&A.

Even
though one could justifiably question the quality of such surveys [hence, the totally unexpected election of president-elect
Donald Trump], it seems that this survey was correct and even overly
optimistical, when the number of electronic payments stands model for the
Sinterklaas sales (which it probably does in my humble opinion). Let’s see in January.

And
please note the paradox in the red and bold text:

Question: Are you optimistical upon the Dutch
economy?

Answer:
Yes, we are
optimistical about the Dutch economy. The government told us there will be
growth north of 2% and the unemployment is decreasing quite rapidly now. So
everything seems to be fine after all, after eight tough years.

Question:
Will you then spend
more money on Sinterklaas presents now that the economy is doing so good?

Answer: Hell, we won’t!

This
phenomenon tells me that the people remain generally very cautious with their consumptive
spending pattern and even spend less than last year, even though the economy showed a
healthy growth during 2016. Isn’t that really, really strange?!

And
don’t believe overly optimistical reporters who state that this loss of sales
will probably be fully compensated by online sales or Christmas sales. Even if
the online sales reaches a level of well over €8.41billion in The Netherlandsin 2016 (the total online retail sales in 2015), this number probably won’t be far over 10% of total retail sales in The Netherlands (€95 billion in 2015). In spite
of the impressive growth rates of the online channels, it is still a small
minority of total retail sales and it will be so in years to come.

What
about Christmas than? Even though it becomes more and more popular under
pressure of the American influence via television and the online channels, it
probably won’t compensate the disappointing Sinterklaas sales. Sinterklaas has
always been and will be the most important shopping holiday in The Netherlands
for at least the next decade, as old traditions have a habit of dying hard.

Further
I don’t believe that the Dutch started to use cash again instead of electronic payments during the shopping
holiday – albeit that that would be a tell-tale signal by itself. When the
retail sales data will be published in February, regarding the Sinterklaas and
Christmas sales, I strongly believe that these data will be quite
disappointing.

What
that tells about the Dutch economy? I think that it is not so strong as the
government and economic pundits want you to believe. At least Jan Modaal (i.e.
Dutch Joe Sixpack) keeps his wallet firmly in his pocket, during the most
important Dutch holiday period for the retail industry. And
when Jan Modaal does not spend his money again, the Dutch economy is yet not
very healthy! I think the writing is on the wall!

Saturday, 10 December 2016

Coen Teulings, the former CEO of the official Dutch
Central Planning Bureau and current professor at Cambridge University is a very
outspoken economist. And one who is not afraid to counter the ‘communis opinio’
in The Netherlands and abroad.

One of the things that professor Coen Teulings dared to
do, both during his time at the Central Planning Bureau as now at Cambridge, is
questioning and countering the enduring austerity policy of both cabinets of
Prime Minister Mark Rutte and his predecessors. About this Dutch austerity policy I
stated on this blog:

Nevertheless,
I don’t expect something good to come out of this hopelessly weak Cabinet Rutte
II in the coming months or years.

The
cabinet sticks to mindless austerity measures and tax increases for the middle
class, which ‘annihilate’ consumption and put the economy further in decline.
At the same time, the cabinet expects ‘the market’ to have a magic wand, which
magically solves all financial and economic problems in The Netherlands. Of
course the market … does not!

There
is no ‘grand vision’ in this Cabinet:

No
industrial policy
for the manufacturing industry, which should aim at bringing back The
Netherlands among the leading industrial nations in Europe and the world;

No
grand scheme for children’s education or for lower and higher professional
education and scientific education. In the vision of the cabinet schools should
do more with less money, but they end up doing much less with less money. At
the same time too little has been done about the excess salaries for executive
managers in the large school conglomerates;

There
is no real debate upon healthcare and the aging process in The Netherlands. The
only formulas of this cabinet are: sobering up the conditions and granted
treatments within the mandatory health insurance policy and again trying to do more with less
money, which fails hopelessly;

No
strategy for the future to clean up the excess capacity in the building and
construction industry or rejuvenate the Dutch housing market by taking the hard
decisions (abolishing the Mortgage Interest Deductability for instance) and the
pain right now;

No
thorough ideas and strategies concerning the globalization and the effects of
this towards employment and employability in The Netherlands;

No
new concepts towards renewable energy and ways to stop global heating.
Concerning renewable and environmentally-friendly energy, The Netherlands is
again among the weakest countries in Europe;

The
renewable energy targets for The Netherlands in 2020 will be missed by a
lightyear;

There
is a deafening silence on almost any aspect of the big energy questions for the
future, in spite of the fact that one of the architects of this Cabinet,
Diederik Samsom, has been a prominent
member of Greenpeace.

Now, 3-odd years after this article, it seems that
prosperity has indeed (slightly) returned to The Netherlands, as the country
has shown very acceptable growth rates during the last two years.

Consequently,
these favourable growth figures were reason for quite a lot of boasting among
the cabinet members, including liberal-conservative Prime Minister Mark Rutte
and Social-Democrat Minister Lodewijk Asscher:

“Thanks to our prudent austerity policy and our successful approach of
the crisis, growth and prosperity have returned to The Netherlands. Without us,
that would not have been possible”.

Well, you know the drill of explaining
economic tailwinds to your advantage, thus making yourself the main responsible
for the economic success.

However, Coen Teulings stated – to these eyes justly –
that he doubted whether this cabinet’s policy of austerity has actually helped
the economic crisis to be overcome and he even dared to suggest that this
policy hampered the economic recovery in The Netherlands. He did so by
comparing the Dutch economic data with – very painful – economic data of the
“not so usual suspect”… France!

France, to many Dutch eyes “the giant on straw feet” of
Europe (i.e. a very large economy, but absolutely not a strong and agile one),
had actually shown much BETTER economic data during the crisis than The
Netherlands did, even though the Dutch economy is intrinsically much stronger
than the French.

Coen Teulings in Het Financieele Dagblad:

The
French economic policy has an ill repute in The Netherlands. France has been
battling with high unemployment for many years, mainly as a consequence of high
minimum wages and rigid protection against dismissal. One would expect that
this country “would get one on the chin” from the crisis and would recover very
slowly. The opposite is true. The French economy performed much better between
2010 and 2013 – the years of fierce austerity in The Netherlands – than The
Netherlands did, according to the accompanying chart.

Economic growth of France vs The Netherlands during the crisis yearsPicture courtesy of www.fd.nlClick to enlarge

When
The Netherlands shows a full percent more growth than France in the whole year
2017, the country will finally have equalled France at the end of 2017.

The
economic recovery is – as a matter of fact – not so much a success of the
established government policy, as the result of postponed investments and catch
up (i.e. latent) growth, to mitigate the earlier crisis damage. When the Dutch
arrears in comparison with France have been dissolved at the end of 2017, both
countries are leveled again at the level of 2010. However, the loss of Gross
Domestic Product over these 7 crisis years is unrecoverable. In this seven year
period, this amounts to 13% of our GDP, or €80 billion.That is multiple times
the cost of saving the Dutch banks.

There you have it. The economic golden boy of Europe The
Netherlands has achieved less than France, the economical laughing stock of Europe,
during the crisis years since 2008. The sheer fact that the Dutch economy now
outperforms France has little to do with a solid foundation, but everything
with ‘catch up’ growth.

This is why the current economic growth can not so much
be owed to Cabinet Rutte II, but – to the contrary – occured in spite of
Cabinet Rutte II, as a consequence of latent growth and lagging investments.

The main cause for the much deeper crisis in The
Netherlands than strictly necessary, according to Teulings: the austerity policy.

Again Teulings:

The
question is why this policy, in spite of the present counter-indicators, has
been supported so broadly? Why The Netherlands has been subject to this blatant
tunnel vision? Economists are always frightened to look at our nature.

But
nevertheless: PM Colijn was the last to drop the golden standard in the Thirties
of last century. Professor in Economy Bas Jacobs points out that ‘debt’ and
‘guilt’ in Dutch are translated with exactly the same word: “Schuld”. Financial
obligations are a moral sin to the eyes of many in The Netherlands.

The
second explanation is the deep recession in our country around 1982. The first
cabinet of Ruud Lubbers has rescued the country. And now the generals tried to
win “that 1982 war” all over again. That is probably the reason for these pundits’
massive blindspot for the immense differences between that [inflation-fueled] recession
and this [deflatory balance] recession nowadays.

However,
the most important explanation lies in the mutual distrust within the Eurozone
and in our ostensible alliance with our powerful neighbour in the east:
Germany. We are frightened for the “prodigality” in Southern Europe and feel
aversion against handing one euro out to the Greeks. Only stricter budget rules
can protect us from that.

The
Netherlands campaigned for that in Europe, which did not do much for our
belovedness and sympathy in Europe. And when the signatures had been set, there
was no way back anymore. From a governmental point-of-view there was of course
– Europe would undoubtedly have agreed with one Dutch exceeding of the budget –
but politically this was a no-go area.

With
a bit of good will, the Dutch policy can be seen as the unintended consequence
of our hard line against the Greeks. A tell-tale is a conversation that I have
with a financial spokesman from the Second Chamber of Parliament:

“Maybe the
European regulation has been too tough for us, but by sticking to it, we
rescued Europe”.

Professor Coen Teulings is astouned by this moronic
statement of this financial spokesman and so am I, as a six year blogger on the
European economy, to be frank. This austerity policy has caused so much damage
in Southern Europe, as well as in our own country and it has put the European
Union so much on the brink of implosion, without ever really solving things for
any country, that one wonders when people finally start to see the fatal flaws of
it.

Due to the fact that Germany and The Netherlands
sticked to this austerity policy as ‘the single medicine for all diseases’ and
refused to look for the possibilities of debt reduction on behalf of f.i.
Greece and Italy, the European crisis lingered on for many years, without
anything being solved for good.

Greece is still a very sick country and – on top of
that – a country that is “a refuge of last resort“ for many Syrian and African
refugees. And so is Italy: equally sick and equally vulnerable to an influx of
refugees. Unemployment is still unacceptably high in these countries and the
problems are still way too huge to cope with them. The European leadership and
especially the stubbornness of the Northern European countries with respect to the
necessary mitigation of these problems has caused much more crisis pains than strictly
necessary.

And all this time, the crisis remains in Europe like a
festering scar, which could bring the EU to the brink of implosion, as it feeds
upon the growing populist feelings living among the European citizens. Not only
in the PIIGS countries or Eastern Europe, but also in the “successful” Northern
European countries, like

The Netherlands and Germany, who could have grown much
harder than they did during the last eight years.

And now the economic crisis might be over seemingly,
but the depression in the hearts and minds of the European citizens is
definitely not. And the Dutch leadership can be partially blamed for that.

Still, I have not abandoned all hope that the European
leadership comes to its senses and realizes that executive action is required
to solve the problems in both Italy and Greece – and as a matter of fact the
whole PIIGS zone, as well as in the Northern and Eastern European countries. As
in these countries too the citizens are more and more lured by the pied pipers
of populism, promising them a brave new world in which all their problems will
be solved.

There won’t be an easy solution to redeem the current
economic depression, but the solution is there “somewhere behind the rainbow”.
Yet, the leading European politicians must dare to look there and not maintain
the administering of a medicine that has proven, beyond a reasonable doubt, to
not have worked in earlier years. The fact that a renowned economic professor
and former official of a leading government institution has come to these
insights is encouraging. And now the rest should follow!

Sunday, 4 December 2016

When one would look at the sheer effects of an individual
fiscal/labour law, the DBA Law (i.e. Deregulation of the Assessment of the Labour relation)
in The Netherlands is arguably one of the worst fiscal / labour laws in
history.

Under the influence of this law – which was (as always)
created with the best intentions by the Dutch liberal_conservative / labour
government of Prime Minister Mark Rutte – perhaps more than half a million freelance knowledge workers are
on the brink of losing their assignments and (thus) their jobs and sources of
income.

What is the point?!

Freelance knowledge workers (and as a matter of fact all
freelancers) have a number of ‘advantages’ for large employers (i.e. the principals) that normal workers don’t have:

They have
fiscal advantages, like a starters’ rebate and an freelancers’ rebate,
which yield substantial discounts on their tax payments;

Both the freelancers and their principals don’t
have to pay social premiums against death, sicknessor permanent disability on their behalf, which
reduces their costs of labour substantially;

The build-up of pension moneyis considered the responsibility and
‘problem’ of the freelancer himself. That sheer fact also substantially reduces the costs
of labour for large principals;

And last, but not least, when the project is
finished and the work is done for the freelancer or in case that a freelance
worker does not ‘fit in the team’, it is much easier to end his contract and dismiss him (or her): no strings attached and no hassle with the agreements within the fixed labour contract afterwards.

In other words: in spite of the substantial hourly fees that
a freelancer requires, they are a relatively cheap and sensible solution for
many large employers, due to the fact that they require less administrative
hassle and carry less legal and financial risks for large companies. This largely
explains the unprecedented popularity of freelance knowledge workers in the
financial, the legal and commercial services industry and other knowledge-intensive
industries.

However, for the Dutch government the main problem of this
widely used method of hiring labour lie in the fact that these freelance
workers enjoyed a substantial (and to
government eyes unjustified) fiscal advantage, in comparison with normal
workers. The aforementioned fiscal favouring was initially aimed at small, “real”
entrepreneurs (like owners of small retail shops, small business entrepreneurs or small, but independently working
handicraft workers), in order to help them mitigate the risks of financial their
independence.

Yet, these knowledge workers with their relatively limited
operational risk, due to their “one hour, one invoice” (in Dutch “uurtje,
factuurtje”) working method and their virtually non-existent, structural
investments in their company or working inventory, also collected this fiscal
advantage, at the expense of roughly 15% of their annual fiscal payments. This
gave them a competitive edge in comparison with normal workers, as they could
work roughly 15% cheaper than the fixed personnel.

And on top of that: in relatively recent years (the starting
point lie roughly five years ahead in the 21st Century) many companies in the
construction industry, but also in (cheap) commercial and logistical services,
started to abolish their fixed contract workers. They exchanged them for workers
on project-based freelancecontracts, which were often – but not always – the same workers as before: also regularly “expensive”, Dutch workers were replaced by cheap workers from the
Eastern European countries.

Many postmen, post-office workers, lorry drivers and
construction workers with a good salary and a decent fixed contract with sufficient labour protection – that they
hoped would last them until their retirement – were suddenly ‘forced at
gunpoint’ (i.e. by firing and hiring them back) to give up their fixed labour
contracts.

They had to exchange it either for a freelance contract with a job
guarantee for the duration of a project or period (i.e for a number of months
or years) or even for an unfavourable piece-wages contract (hence: the postmen
and post-office workers): “Accept it, or leave and be replaced by a cheap
worker from Eastern Europe” was the explicit message of their former employers
/ new principals.

And that was when things started to turn really sour for the
Dutch goverment.

Not only were massive amounts of freelancers (recently over a million) nibbling away the
tax advantages that were aimed at the real freelancers, but in many cases this
money was in fact directly handed over to the large principals in the form of discounts on social security payments and reduced hourly fee rates.

On top of that, there were numerous cases in which freelance
workers – especially the ones in very vulnerable positions – were abused by
their principals, as these knew the vulnerability of their freelance workers
and (ab)used that knowledge to get their hourly rates down. The victims of this
modus operandi were moderately educated Dutch workers in simple,
labour-intensive jobs, but also foreign workers who were hired and deployed against
very unfavourable contracts. These people earned just enough money to live
from, but had not enough money to build up a pension and maintain a decent
sickness and disability insurance.

And so the Dutch government got stuck with a growing group
of vulnerable, underpaid and under-insured freelance workers, who posed a
growing risk for the stability within the Dutch labour market and society,
under the pressure of the enduring financial crisis and the stalling economy.

Unfortunately, however, the Dutch government had the right
vision upon this enigma, but found the wrong solution to solve the problem.

For the Internal Revenue Service in The Netherlands (i.e.
Belastingdienst), there were traditionally quite strict differences between a
real freelancer and a normal worker. A freelancer was someone without an
official ‘boss’ or superior, without fixed assignments and without restricted
labour hours; in other words, someone who was result-responsible, and not only
committed to achieve the result.

Nevertheless, the responsibility traditionally lie with the
freelancer himself, as it was established in the form of the ‘labour relation declaration” (i.e. the
“VAR verklaring”), in which the freelancer stated that he was really an independent worker, who was in full control of his working activities and employment. Once this official document was handed out to the freelance
professional, his principals were officially preserved against counter measures
from the Dutch IRS.

However, in June of the year 2016 this VAR verklaring was
replaced by the aforementioned DBA Law, that made the principal co-responsible
for the freelancer being a truly independent worker and not a false
self-employed: independent in name only, but in reality solely committed to his
temporary employer and totally equal to a fixed contract worker. That is, without
the social security and pension payments and without a social parachute against
sickness or disability.

And the most scary part of this new DBA legislation
was, that the IRS could decide independently and retrospectivelywhether a freelance consultant had been a genuine freelancer indeed or a false self-employed in disguise.

And that is where the sh*t started to hit the fan...

Under the influence of anxious legal counsels, who were
frightened for the financial consequences of their companies having “not-so-freelancers-who-could-prove-to-be-false-self-employeds-after-all”
more and more companies started to abolish their freelance workers,
as they posed a risk for the financial and legal wellbeing of the company.
Those were banks like ABN Amro and ING, but also large commercial service
providers like Brunel and many, many others.

And the more the Minister Lodewijk Asscher of Social Affairs
and especially State Secretary Eric Wiebes of Tax Affairs waited with making official statements in order to take the unrest
away caused by the law, the more anxious the large principals became. And when
State Secretary Wiebes finally responded to the side-effects of the law a few months ago, his
reaction was more akin to ‘extend and pretend’ than that he offered a real
solution for the raised questions and concerns.

Wiebes’ reaction was almost equal to the reaction of the
pre-World War II Prime Minister Colijn in The Netherlands, when he was confronted with
the mounting German danger: “Please go to sleep quietly. Everything will work
out fine!”

In this case Wiebes asked everybody to “go to work happily,
as everything would work out fine”. Most large principals and their lawyers,
who remembered this infamous statement by Colijn, drew their conclusions and
panicked.

As I stated earlier in this article, it is the retrospectiveness that has the large and smaller principals worried about. It is the knowledge
that somewhere in the future companies can get penalized for presumed offences
against this law, of which the rules are maintained by the IRS – which is both
claiming party and primary judge in such cases – while there still is no
jurisprudence at all. Now the large and small principals wait until the first presumed offender runs the gauntlett and starts a test trial against the IRS. That won’t
now happen before January 2018, as only than the IRS will start to penalize alleged
offenders.

This proves why this postponement of State Secretary Eric
Wiebes is “a useless postponement of inevitable events”: events that have
companies worried sick.

Instead of taking away the source of uncertainty that companies and
freelancers suffer from, he prolonged the uncertainty for a few months, while
playing “extend and pretend”.

So even though this DBA law has been deployed with the best
intentions, the results are catastrophic for too many freelancers and also too
many principals, who are temporarily strapped for commercial and ICT professionals
during the execution of their projects, but don’t want to have them on the
payroll in a fixed contract. Even though I can’t prove that this law cost me my
career as ICT freelancer, it did not help it certainly.

Therefore I am asking both the Minister and the State
Secretary to abolish this law, as it is currently creating havoc in a labour
market with over half a million successful and certainly not underprivileged knowledge
workers.

Go back to the drawing board and create a better law that
does protect the really underprivileged freelancers in very vulnerable
positions, like low-educated construction workers, underpaid postmen and post-office workers or lorry-drivers and
low-educated workers in the agricultural industry. Those are the people that
need a strongly improved protective law, like this one intended to be.

But you better leave a labour market to peace that does not need
your intervention, as the freelance workers, as well as their principals have been able to work successfully and keep afloat for
more than thirty years.

On top of that, State Secretary, you should do one more
thing, even though the liberal-conservative VVD party will probably try to kill
you for that:

Please make an end to the Starter Toeslag (i.e. a 'Starters' rebate) and the Zelfstandigentoeslag (i.e. a continuous tax deducation for freelance workers and small enterprise owners) for ZZP’ers
(freelancers). Maintain both laws for retailers and owners of small businesses
alone, as these people do have high starters' investments and run substantial financial risks in their daily operation.

Freelancers hardly have to make investments to execute their job, as
they mostly have few more expenses than a laptop computer, a rental car and
some representative clothes. They neither have expenses emerging from maintaining an office and staff nor do they have high investments to make in inventory and an
administrative system. And when they are sufficiently employable and ‘fit for
the market’ they start making money from day one of working.

This means that in a normally successful year, such
freelancers make more than enough money to pay their dues, build up a pension and pay for a disability insurance, while still earning a decent profit to live from. And when they are
not so successful for a longer period, they should really ask themselves
whether they have found the right job to do.

And there is more.

When these two tax deduction sources are abolished for
freelance commercial, legal, financial and ICT workers, this would make an end
to the “false” competition with normal workers, who have to pay the full amount
of taxes each year. Now the freelancers have a tax advantage of roughly 15% in
comparison with normal workers. This discount can give them the edge in the minds of
large principals. That is not fair for normal workers.

When these tax deductions are taken away from the
aforementioned freelancers, this pushes principals to give them a fair remuneration
for their efforts. A remuneration of which they can live in the long run, without tax subsidies. And also this makes
normal workers cheaper in comparison. Then such principals can make a fair
choice.

But the DBA Law? That one is dead-on-arrival! Even if you
postpone the penalty phase until eternity, companies will leave the freelance
professionals like a dead rat! And that is really a shame for my former
colleagues in the freelance business. And an unnecessary one!

Photo

Totaal aantal pageviews

Gold price

About me

Hi, I am Ernst Labruyère. I live in The Netherlands with my wife Olga and my three children.
I blog on the Dutch, European and worldwide economies.
I try to bring you the interesting newsfacts and insights.
Besides doing photography and playing my electric guitar, I'd like to drive to my work with my racing bicycle. Saving the environment and getting rid of some pounds. I hope you enjoy this blog. Please let me know: @orbeaernie on twitter or ealabruyere@gmail.com